Avoiding Financial Burdens During Difficult Times

6.9.23: Audio automatically transcribed by Sonix

6.9.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Safe Money Masters with Greg Castle. Get ready for a full hour of financial information and economic news you can't afford to miss. Greg works hard each and every day to help hard working Americans like you navigate challenges and reach the financial freedom they desire and deserve. So now let's start the show. Here's Greg Castle.

Greg Castle:
Hello and welcome to Safe Money Masters, where our main goal is to help you become masters of your money and teach you how to keep it safe. You know, we hope that you're having a terrific Tuesday. Matt, are you having a terrific Tuesday today?

Producer:
I'm having a terrific Tuesday. A terrific Tuesday. As almost as good as a taco Tuesday.

Greg Castle:
Guess it's better than the fourth Monday of the week. That's very.

Producer:
True.

Greg Castle:
Anyway, I'm Greg Castle. I'll be your host, along with my co-host and producer, Matt McClure. And Matt, I think we have a great show lined up for our listeners today. So why don't you tell us a little bit about what to expect?

Producer:
Yeah, absolutely. You know, it's it's going to be a jam packed show, but full of a lot of great information for our listeners. And really, I think the first topic that will sort of preview here is something that I don't think anybody likes to think about, but everybody needs to think about it, talk about it, plan for it. And that is how to prepare for the death of a spouse. You know, if you're if you're married, chances are, you know, one of you is going to go before the other. And so whoever is still around needs to really plan ahead so they can avoid that financial burden during what's a very difficult time. So really, you know, a more serious topic, but one that we really do need to talk about. They're also a living will kind of part of that same discussion there. It's an important document to have. We'll make sure you know what it is and why it's so important to have one. And then, you know, covering retirement income gaps when you're in retirement, are you going to have a retirement income surplus or are you going to have an income gap? Well, if you've got a gap, well, we'll help you fill that gap here on the show. We'll have a little this week in history with some good celebrity birthdays this week. And if we have time at the end of the show, of course, we'll do our Ask Greg segment where Greg will answer a question asked by one of our listeners here to the show. So there you go, Greg. A lot coming up and it's going to be going to be a good one.

Greg Castle:
Yep. I'm looking forward to it, man. Hey, in case you're wondering, this show is relatively new to the Tampa market. Now that I live here, I'm looking forward to engaging with our listeners on a number of topics that we feel are relevant to those of you who are retired or those of you that are approaching retirement. The whole premise of this show is to bring you topics and tools that that we feel will help you grow and protect your wealth and retirement income. So we hope that you keep tuning in so you can catch us every Tuesday evening at 6 p.m. on Moneytalk 1010 and on your local FM stations at 92.1 and of course, 103.1 up north. If you happen to miss an episode, you can catch the replay at SafeMoneyMasters.com or wherever you listen to your favorite podcast. You can also check out our YouTube channel and subscribe to see weekly videos and highlights and special content. And if you've got any questions or comments, feel free to email me at Greg at SafeMoneyMasters.com or call me at (813) 430-7100. Okay, Matt, let's get things started off with our Quote of the week.

Producer:
And now for some financial wisdom. It's time for the quote of the Week.

Producer:
This one, of course, coming from John F Kennedy here. He spoke these words during his State of the Union address in 1962. And in that speech, he said this, quote, The time to repair the roof is when the sun is shining.

Greg Castle:
Yeah, Matt, that could never be more true. You know, this message still rings true today because, you know, those who plan in advance for rainy days in retirement will be more prepared to endure any storm that comes their way. As we mentioned last week, you know, June is a nudity awareness month. So Annuity Awareness Month takes place in June each year and aims to educate people in annuities and you know, about their potential benefits as part of retirement planning. So with that said, perhaps we should probably start out by explaining what annuities actually are. To put it simply, annuities are financial products typically offered by insurance companies. They provide a steady stream of income that can't be outlived and when used correctly, as recommended by a financial advisor such as myself or your personal advisor, if you have one. These personal pensions can play a critical role for retirees. Now they're similar to Social Security. And in the extent that they can pay you an income that you can never outlive, for example, in Social Security lasts until you die, an annuity, an income annuity will pay you until you die. And if it's a joint annuity, it will pay until the second you or your spouse happens to pass away. It'll pay you both until the last one passes. So what makes annuities different from Social Security is that annuities are required to maintain at least 100% financial reserve so that insurance companies are sure to have the cash on hand to pay all the annuity owners what they owe them. Social Security is also subject to government volatility. Most people don't realize that. So in other words, we talked a week or so ago about the fact that Social Security is projected. Social Security Administration, I should say, is projected that its trust fund reserves could be depleted by around 2034, and that's likely going to lead to partial cuts of benefits of as much as 25 to 33%.

Producer:
Yeah, and that's one of these things, you know, we say that where the difference is between annuities and Social Security. One of the big ones is that 100% reserve requirement of the insurance companies. You know, so you say you have $100,000 that you place into an annuity that insurance companies require to keep $100,000 on on their books, as you know, to represent that money that you have put inside that annuity. So that would be great if Social Security would do something similar. But that has not been the case in a long, long time.

Greg Castle:
Talk to your favorite politician and see what they can do about that.

Producer:
Yeah. Exactly. Exactly. Nobody seems to be able to do anything to kind of fix things, but that's that's for a different show. But anyway, so, you know, and as a matter of fact, Greg, I think this is a good place to to mention I was listening the other day. I was actually just surfing on YouTube and happened to run across a video of someone who is a, you know, one of the big time radio financial guys whose name you would probably know if I said it, but I won't. And it was sort of badmouthing annuities a little bit. And a caller had called in and asked about, you know, should I put a certain amount of money into an annuity? And he was just saying all kinds of things that really didn't resemble anything that we know to be true about, about annuities. He was at least the kinds that we recommend. He was talking mainly from from what he was saying. And he didn't say this. He was talking mainly about variable annuities when he was talking about high fees and all this other stuff. But he was saying that basically annuities in general are all bad. But I think that that that is just absolutely not the case. It's not it's not the truth that that is a that is a myth that's out there. So let's I guess let's play the MythBusters here and kind of bust that myth.

Greg Castle:
Yeah. You know, the myths and I know some of the advisors you're talking about. Uh, there's one that really is not an advisor, but he gives a lot of financial advice and, you know, a lot of information he gives is good. But at the same time, you know, there is no one size fits all retirement. You know, for example, annuities may not be for everybody, but at the same time, when it comes to being a retiree or pre-retiree getting close to retirement, annuities have a lot of benefits to them that you can't get anyplace else. And but the people that normally talk bad about annuities are typically those myths are basically perpetuated by investment firms and advisors that don't have access to them. And there's a lot of reasons why.

Producer:
Yeah. I mean, why would they not want to offer some sort of product that has that guaranteed safety and that guaranteed protection of principle? And I would just say I would just pose any way that it could be. One of the reasons is because everybody in the financial world, most people in the financial world have learned to be scared of that word guarantee because it's usually kind of like a four letter word in the financial industry. We're not supposed to say that that anything is guaranteed, but when we're talking about annuities, we can use that word because there are guarantees that come along with them.

Greg Castle:
Yeah, I was a former stockbroker years and years ago, and as a stockbroker, you know, we couldn't guarantee anything. You know, we could tell you to buy this certain stock and make a recommendation for a stock. And of course, if our client trusts us, they would do what we ask them to do. And we couldn't guarantee that that stock was going to go up or make the money. We couldn't guarantee that the company behind it was not going to go bankrupt at some point. Talk about Enron, for example. And there were no guarantees in that particular industry. So when it comes to stockbrokers, when it comes to investment firms that don't really handle things like annuities, they don't like the word guarantee because those folks that are able to have access to them for their clients, we can use that word because by contract and an annuity is a contract, you know, your principal is guaranteed. And but one of the reasons why you must ask the question is that why would they not offer the product? One of the primary reasons is the fee structure. You know, again, I think we mentioned on another show that, you know, there's a company out there that you would all recognize the commercial if you saw it. And he talks about about annuities all the time, takes that full page ad saying, I hate annuities. You should, too. He's talking about variable annuities. But you know, the impression from the folks listening to the commercial is that all the annuities are lumped together and just all annuities are bad.

Greg Castle:
Not the case, but part of it's the fee structure. You know, for example. Investment advisers that handle what we call AUM. Assets under management. They normally, you know, their intent is to do a good job for their clients. The thing about it is, though, if they put annuities in there, they really can't charge a fee on the annuity because the annuities are typically commission based products. In other words, the insurance company will pay the adviser sort of a sort of a marketing fee for lack of a term. They will pay them to to to basically explain their products to clients. So the clients want to act on it. Then you know that that particular advisor will get paid. A commission not unlike a real estate agent would do, but it's a one time commission. They get paid one time. That's it. However. When it comes to your assets under management that your financial advisors have, they're going to take a fee every year for as long as you have money with them. So if you happen to be, you know, in your 60s now and you live to your 80s, you keep that same advisor. They've collected, you know, one, one and a quarter, 1.5% fee every year for those 20 years. So as your account values have gone up, their fees still is 1.5%, but it's 1.5% of a larger amount at this point.

Greg Castle:
There's nothing wrong with that, don't get me wrong. If they're doing a good job for you and you got to take the fees away from that. But, you know, again, annuities have a place in most retirement portfolios. And you can ask any economist out there and they will tell you the same thing. But, you know, there there's a lot of different types of annuities out there. We cover this topic in depth on our show a couple of weeks ago, but here's a real quick refresher. Uh, you know, some of the five types of annuities that are out there. You know, one is immediate annuities is sometimes called a single premium, immediate annuity or a sPIa. It provides an income stream after, after a lump sum payment. Uh, a lot of corporate pensions and public pensions are actually funded by spias. That's why we sometimes recommend taking a lump sum and considering a more lucrative annuity option. This offer by the top carriers in the marketplace. In other words, a sPIa is one of those products that we don't recommend a lot. There's a specific place for them. If you need immediate income and you're at a point where there's no one that you need to give the money to, you're basically just want to make sure you have income to live on until you pass away. Then a sPIa might be good for you.

Greg Castle:
Another type of annuity is called a Miga. Miga. It's a multi year guarantee annuity. It offers a predetermined, contractually guaranteed interest rate for a fixed period of time. And usually that they're usually short term, they're going to be somewhere between 1 and 5 years. And the longer just like a CD, the longer you're willing to, you know, put your money with a carrier for that product, then usually the higher interest rate they're going to pay you on that particular product. Another type of annuity is basically a fixed annuity, and a fixed annuity is an insurance contract that promises they're going to pay the buyer a specific guaranteed interest rate on their principal. Now they offer stable, predictable income and are considered to be very, very low risk. You can buy those in different terms from anywhere from 5 to 15 years. In some cases, fixed indexed annuities are the fourth type we talked about last time. Fixed annuities basically are another insurance contract that provides you income in retirement. Now there are fixed annuities. Basically, you have some that are geared toward accumulation. You can still turn income down the road. You've got some that are geared for income, deferred income, but they're still fixed indexed annuities. Your money is basically tied to an index, but it's not actually invested in the index. So because of that, people who enjoy or people who own fixed indexed annuities enjoy market like gains without the risk of losing their principal or credited gains due to market downturns.

Greg Castle:
So fixed fixed indexed annuities are one of my favorite products for most of the retirees. But again, there is no one size fits all retirement, and that fifth type is basically that outlaw among annuities. It's the one that everybody talks about that they try and lump all annuities into. That's variable annuities. Variable annuities are basically mutual fund type investments that have some insurance related guarantees. And it sort of bundled with an insurance product. The guarantees are basically things like, you know, living and death benefits, which all the other all the other most of the other annuities have. You got a potential for higher returns. But they got high fees. They get fees that run anywhere between 3 and 6%. And one of the biggest downsides of variable annuities for retirees is that they're really subject to market volatility, which means you can lose money. So if you currently hold or think you hold a variable annuity or any other type of annuity for that matter and would like us to examine it for you, you know, call us for your free annuity x ray where we can help you understand what you have and and present any alternatives that could improve your future income potential. You can reach us at (813) 430-7100. Or you can call me directly or email me directly at Greg at SafeMoneyMasters.com.

Producer:
Well, very good. And so, you know, we wanted to talk to Greg about this sort of common mistake that retirees make because it has to do with, you know, all that we've been discussing as you've been laying out kind of the the different types of annuities, they they pretty much have one thing in common, and that's the ability to, of course, generate income in your retirement. People often will make this mistake of not realizing that it's much more important to actually focus on that retirement income piece than it is saving this one big magic number nest egg thing. Like they have this one big amount in their mind and that's the goal. That's what they want to get to. And having goals is great, but when you get to retirement, income is going to be more important than having that big nest egg number.

Greg Castle:
Yeah, I mean, most people focus too much on maximizing their 401. S and IRAs. They keep forgetting that these are tax deferred retirement accounts and they're going to be subject to income taxes and required RMDs or required minimum distributions. And that basically means that their nest egg isn't as big as they think. Uncle Sam's going to force them to take withdrawals as they age. And how much those withdrawals are going to be is going to depend on a number of factors. And also as they make withdrawals, they have to pay taxes on that withdrawal in most cases, unless it happens to be a Roth The. Um, you're, you know, for just hypothetically, you know, we've talked about this before. If you happen to have $1 million sitting in your nest egg. First of all, lucky you. Second of all, you don't really have that million dollars doesn't belong to you. Uncle Sam has been basically like a mother hen sitting on an egg, waiting for it to grow and grow and grow and hatch. And all of a sudden, you know, you've got that million dollars. Now they're salivating. Uncle Sam is salivating and saying, Wow, you know, thank you for growing me a lot of money because now I get a chance to to tax it at whatever tax rate it happens to be at the time you make those withdrawals. And if you talk to anyone and you ask them a question and I ask all my clients this, you know, do you think taxes are going to go up? We're going to go down or stay the same in the future? What would you say, man?

Producer:
I mean, I would say given the state of a lot of different things, that taxes are going to have to go up, up.

Greg Castle:
And I've never heard anyone answer yet that they think they're going to go down. So with that said, as basically as you get older in retirement, if taxes are going to go up, that means a bigger portion of that million dollars we just use as a hypothetical example is going to belong to Uncle Sam as you pull it out. And, you know, currently, basically 36% of it would belong to Uncle Sam. Now beginning in 2026, whenever that the Tax Cut and Job Act expires at the end of 2025, we know that automatically it's going to jump back up to 39. So let's say that it's 39%. That means basically out of your million dollars, you only you don't have $1 million. You've got 610,000. And it could be more than that. Whenever they start taking whenever they start taking your your your taxes out of your money, but they will force you to take money out as currently at age 74 is whenever it begins for most people, whenever that they start taking RMDs out. When you start taking them out, you have to take RMDs out and at that point they'll start taxing you.

Producer:
Yeah. And that RMD age is set to go up and up I think eventually to 75 I think is when they're going to going to do that. That was part of that secure Act 2.0. I believe that that passed last year and that was, that was one of those things that's kind of like, you know, it seems like a good a good thing on the surface for retirees. But then, you know, you could end up, you know, paying even a higher tax rate in the in the future because your money has more time to grow before you take a distribution from it. And tax rates have longer time to to increase like a lot can happen you know during that time.

Greg Castle:
Right And. Yeah, you just like I say, the secure Act 2.0 was actually a blessing to a lot of lot of retirees because the current tax rate a couple of years ago was 70.5. Then they raised it to 72 and now they've raised it to 74. And then eventually I think it's around 20, 33, 2034, it actually jumps up to age 75 before RMDs are due to come out. So yeah. Um, all right.

Producer:
Good stuff there. Well, good. Okay. So we're going to talk about we teed this up at the beginning of the show here, Greg, that, you know, it's a bit of a bit of a serious topic here and something that people don't necessarily like to think about, but something that is a is an important topic to think about, and that's how to be prepared for the loss of a spouse. Basically, we want to talk about this because when that happens, you know, you are going to be having to think about so many other things. Money doesn't need to be the thing that you're that you're thinking about. You want all of that to be taken care of ahead of time. So that's not an extra burden on top of it because, you know, I mean, a large majority of married couples are going to go through this at some point in their lives. And it's you know, it's not really common for couples to pass away at the same time. So one person is going to be around longer than the other. So we got to plan for whatever might happen. And that's really super important.

Greg Castle:
Yeah, really? Um, yeah. Unless you happen to pass away in a, you know, public transportation crash or even a driving down the road somewhere and you pass away in a car accident, the likelihood of both of you passing away at the same time is very, very low. This is a conversation that I've had to have with my wife because she's significantly younger than I am. And because of that and also because of the fact that women normally live longer than men. Um, you know, it's really important that that she's prepared for this. And there are a number of challenges that any surviving spouse is going to face. You know, number one, talking about Social Security, they're going to immediately lose approximately, you know, a third to half of the Social Security income because the smaller of the two benefits goes away. In other words, the surviving spouse can draw the higher of the two benefits, but they can't draw both. So one of the one of the Social Security checks is going to be gone. Um, and then basically along the same lines, as soon as the Social Security Administration and the bank received death certificate, those additional deposits you're receiving are going to stop.

Greg Castle:
And then the year after the spouse passes away. Uh, this is something most people really don't think about is that you're going to face a higher income tax bracket as a single filer because you no longer can file married filing jointly. Um, you'll you'll you'll file taxes for their spouse for the year of their death. Following that, you'll basically file, you know, a single as a single filer which means that you still have income coming in. But it's going to be basically you're going to you're going to pay more taxes. You're going to lose the tax deduction. That's part of the reason you're going to pay more taxes because you're no longer married in most cases. Social Security is going to be taxed at a higher rate than it is currently whenever that you're married. Medicare surcharges will go up because they're going to be in a higher tax bracket because of some of these things. And especially in a situation where you have assets coming your way and you have, you know, additional income you weren't expecting or hadn't really planned for, your income tax is definitely be taxed at a higher rate.

Greg Castle:
The Medicare surcharges can go up if your income is above a certain level as a single filer. In other words, currently as a single person, your Medicare taxes or your Medicare premium for basic part B is $164.90. If you go up to a higher tax bracket or the next higher tax bracket, that could feasibly double, in some cases double or triple, depending on your bracket. In most cases, probably not more than double, but you're going to face all these new financial challenges right after losing your partner in life. And that can be really devastating if you don't have a plan and a roadmap to help you get where you need to go. So if there are any widows or widowers out there that meet with us, like other clients, have gone through the same things, you're never going to have to face these challenges alone. And our clients know that, that we're there for them during good times and bad and that we're there to help them. And again, we don't charge you anything for this. We're basically a no cost advisory or strategy company. So if you or someone you know recently lost their spouse and are experiencing the burden of the widow's tax, you know, please give us a call at (813) 430-7100 or you can just email me and let me know what's going on. You can email me at Greg at SafeMoneyMasters.com.

Producer:
So then, Greg, the the question becomes then, you know, because we're calling this the widow's tax, which it really is, you know, because it's there are all of these different aspects financially that you're going to have to think about and they'll result in whether it's literal higher taxes or, you know, a reduction in income, any of that. It really amounts to a tax, basically. So how do people prepare for that?

Greg Castle:
You know, if you're if you're the provider and breadwinner of the family and don't have a solid retirement income plan, then we strongly encourage you get in touch with us, first of all, so we can help you build a plan that's going to help your spouse and family to prepare for things once you're gone. It's also important that you work with an advisor, whether it be us at Castle Financial Solutions Group or another advisor that you're comfortable with and have worked with in the past. But get some professional advice before you pass away and ideally before your health ever begins declining to make sure that you are prepared and any legal documents that need to be drawn up can be done while you're in still in sound body in mind, as they say. The more time you've got to work with, the more options that you're going to have and the better off you're likely to be. There's two important decisions that every couple need to consider before retirement. There's several, several things, actually. But, you know, two of the things regarding Social Security is, you know, when should your spouse and you take Social Security because there are some strategies that maximize your benefit. Another one is going to be, you know, when when one of you pass away, how will the surviving spouse feel the income gap, you know, left by one of the Social Security payments going away? Those are questions you got to prepare for. So, you know, just let us help you get prepared again, Give us a call at (813) 430-7100. And again, you can shoot me an email at Greg at SafeMoneyMasters.com.

Producer:
All right. So and when people do that, Greg, when they send an email, when they go to the website to save money Masters.com or give you a call, what are some of the things that you can help them with? How can you help people really prepare in advance for these, you know, unforeseen things and these things that we that we don't like really to talk about at all?

Greg Castle:
That's a good question. One of the things basically is we can help you, help you basically create a vision for retirement without your spouse in advance. And let me give you an example. There's a client, a husband and wife I was talking to at one point. We're doing this virtually, by the way. So we were talking and they were both on on the call. So I'm talking to the spouse. They're talking to the wife who's, again, a little bit younger than than her husband was. And we posed that question. I said, you know, what happens when when? Well, I won't call his name. We'll call him. We'll call him Ed for lack of a better name. So what happens when Ed passes away? I said, Ed, you just died. So you know you're not in this conversation. So I asked her and we'll call her Judi for lack of a better name. And I said, Judi, what happens when he passes away? You know, what do you do? And she stumbled for a second like that. And he started to chime in. You know, just basically, Ed, you can't talk anymore. You're dead. Okay. So because, you know, it's easy to know the answer, but you haven't really relayed that answer in a way that your spouse actually understands it or basically knows what to do. And it's kind of like you have a lot of things going on. You have paperwork out there, you have maybe life insurance is at work. You've got other assets or other things that your spouse really has not been part of at any point, but they're the beneficiary of. So what they need to know is just basically ask them, you know, you need to have something that's going to tell them, you know, what they have and how to access it and who to call.

Greg Castle:
You know, What have you got? How do I access it? Who do you call without knowing those informations? You have a really hard time, so you need to create a I guess another thing is basically create a solid retirement income plan. You need to understand your expenses in retirement need to establish income sources that you can count on that you can never outlive because you don't retire on assets. You retire on income. If you've got a previous 401. K 403 B TSP bonds in your portfolio, anything like that, you know, consider replacing a portion of the value of those with fixed indexed annuities because they can provide that income that you cannot outlive. Another thing. Number three, basically we measure your retirement income gap. So what is an income gap? Income gap is basically the amount you have coming in minus the amount you have going out once you retire. And a lot of cases you're going to find out because of inflation or because of in taxes or because of diminished income, your expenses are basically going to be higher than your guaranteed income coming in. That's the income retirement gap. So hopefully you have a surplus. But if you don't, you need to be able to calculate your expenses and know how you're going to cover those expenses, you know, prior to retirement. And in some cases, we have to actually tell clients basically, you know, you really need to you really need to downsize your lifestyle. But sometimes people need somebody to tell them that and open their eyes before they realize that they're going to be in trouble if they don't.

Greg Castle:
Um.

Greg Castle:
If you're still in your 40s or 50s, you know, we can help you build a plan that's going to help you receive tax free death benefit whenever your spouse passes away and help you sort of ease the income pressure. Another thing you can do is basically delete the IRS from your retirement account by implementing basically a Roth ladder conversion as soon as possible. And again, that's not something that everybody is going to be able to do. However, it is a strategy that in many situations will help you be able to avoid taxation down the road somewhere because you get it out of the way first. But you don't want to do it all at once. It can really come back to haunt you if you try and say, I got this big pile of money. I just want to basically convert it, pay my taxes on it like you would with a lottery win or whatever, and keeps what's left. What you don't realize is that next year you're going to be in big trouble because the taxes you've got to pay on all that income at one time. And also it could also increase your Social Security premium and a lot of other things you haven't taken into account.

Greg Castle:
Um.

Greg Castle:
And heaven forbid, but it's going to happen to everybody out there in most cases. Once that your once that your spouse passes away, you need to immediately review and reset your financial plan, consult with your CPA or tax professional or financial advisor annually to verify that you're still on track with that plan. So I know that dealing with the emotional burden of losing a spouse often takes time and support from family members as well as professional counselors. When my dad passed away, you know, quite a while ago, you know, mom was left and she never was really a dad, took care of all the bills. So mom really wasn't prepared for that. And I had to go back every weekend when I was at home because I was out of town during the week. A lot during that period of time. And see what bills came in and helped mom get them paid. Help get set up on autopay. Those type of things just basically help her out. So you need support from family members as well as professional counselors, but you can take steps in advance to ensure that financial challenges don't add to stress that you're going to experience at that particular time. So again, we encourage you to to schedule a complimentary financial retirement consultation with your family today. Again, you can contact us at (813) 430-7100. Or you can just send me an email at Greg at SafeMoneyMasters.com.

Producer:
Be a great thing to do because, like we say, not something that people really like to talk about but need to talk about. Probably another one of those things to Greg that people don't necessarily like discussing is sort of, you know, taking into consideration their own mortality. Right. You know, we've been talking a lot about the death of a spouse and what you would do if that spouse passes away. Well, what about when you are, you know, deathly ill or incapacitated, those types of things? That is where another important piece of the puzzle comes in. And that's a living will. Right. So explain that to our listeners, if you will.

Greg Castle:
Yeah, A living will is also called an advanced health care directive. It's it's a legal document that allows individuals to specify their medical treatment preferences if they become unable to communicate. It outlines an individual's preferences regarding life sustaining treatments, how they want pain management to be taken care of, and also organ donation if they're if they want to or don't want to be an organ donor. It also serves as a legally binding guide for health care professionals and family members to make decisions that align with the person's wishes. It also the legal requirements for a living will vary. So, you know, again, consulting with an attorney or an estate planner following local guidelines is strongly advised for for creating a valid and enforceable document. And it's really important to get that advice. Let me give you an example. Uh, my father in law had ALS for over 25 years, and toward the end of his life, he really wasn't able to speak. So they went on and they actually did basically a generic living will, in which case he specified in there. He just wrote down, you know, comfort measures only. And even though he was in decline, you know. Whenever he went in for an episode that happened right before he passed away the because of that document.

Greg Castle:
They really couldn't do anything for him. Comfort measures only to the people that read that document and the way they interpret it was basically.

Greg Castle:
Can't have any food. Basically, we're just gonna let him pass away. No feeding tube, no resuscitation, no anything else? So they put him in hospice, wasn't allowed to eat anything. Just basically kept him comfortable until he passed away. So be careful how you word your document. And that's why you really need someone who knows what they're doing. You know, preferably in this case, a, um, a legal adviser of some sort to make sure that you clearly articulate what it is that you want and that living will, because it is a legal document and it is contestable in court.

Producer:
Yeah. And I was actually this was a proud son moment for me when I when my dad got got sick a couple of years ago before he passed away, was finding out that both my parents actually have living wills my dad had living well, my mom has a living will and that they actually had someone who was, you know, a legal adviser come over and go through all of that with them and make sure that all the I's were dotted and the T's were crossed. And, you know, I found that those as we were looking through some of my dad's things when he first went into the hospital and I was like, oh, wow, this is this is pretty awesome. You all have actually planned for this. And, you know, they they had, you know, when it comes to financial stuff, they didn't have all of their ducks in a row. They had some of their ducks, you know, still kind of trailing behind or have had gotten out of line and were not quite in that row as they should be. But, you know, they had this as something that, you know, people would know what to do and they had it done the right way. And so I was I was very pleased with that. Yeah.

Greg Castle:
I find a lot of times that, you know, I have clients that I talk to and as we're going through sort of the planning process, you know, they focused their entire careers on on getting their 401. K 4 or 3 B, you know, to that million dollar mark. They're basically, you know, 41K millionaires, which is great. But the missile focused on accumulating the money, they really haven't taken into account. You know things like this the living will sometimes a will in general. So those legal aspects those legal documents are are certainly part of the process. You know, along with accumulating all the money that you need for retirement. So anyway. What's next, Matt?

Producer:
Well, let's talk about you know, you mentioned a few minutes ago here, Greg, a retirement income gap, right? So if you've got more more month than money basically in retirement rather than the way you want to be having more money than month. Correct. So so talk about that retirement income gap and and let's, you know, give give the listeners here some tips on exactly how you might cover that if you find yourself in in the red, as it were.

Greg Castle:
Yeah.

Greg Castle:
You know, according to NHP Foundation study, 62% of baby boomers believe Social Security will provide at least half of their income during retirement. You know, your Social Security benefits alone are not going to be enough to maintain your standard of living. I'll give you an example here. We did some research and found out that the average monthly benefit is only $1,342 a month. That's $18,500 annually. The max monthly benefit if you're 62, is $2,364, and that's only just a little over $28,000 annually. The max benefit, if you're if you wait till you're 70 and you're able to get the max benefit is, you know, just under $4,200 a month, which comes out to a little bit more than $50,000 a year. So, you know, in most cases, coming from what you made during the working years to living on Social Security, even at the max, your your standard of living is going to be reduced unless you have other assets that you can pull from or unless you have other guaranteed lifetime income, such as a pension or such as income from a fixed indexed annuity. Now, 76% of retirees, according to our research, basically says that income stability is one of their top concerns for retirement. So we talked a little about what a retirement income gap is. But, you know, just to reiterate a little bit, is that retirement income gap basically takes a look at your core expenses, which are basically food, clothing, shelter, taxes, health care, other needs, plus discretionary expenses such as eating out, entertainment wants, needs just for the grandkids, those type of things minus guaranteed income sources, not just periodic income sources, but guaranteed income sources such as pensions, Social security or other annuity income.

Greg Castle:
And that number, your core expenses minus guaranteed income sources, gives you your retirement income gap or your surplus, hopefully. But in most cases, we find that as a retirement income gap because of inflation and because of taxes. So how we how we basically let's go back here how you can feel all your retirement income gap is a number of ways. Number one, I would suggest that you make sure that you're saving enough money during the high earning years. We know that, you know, early on in our careers, you know, a lot of our money goes to expenses. Raising a family, proms, all those different things that just come up and bite us in the butt sometimes. But as you get older, your empty nester, you're making more money than you did before. And it's important to sock away some money that you will have for your retirement years. You can also review your monthly expenses for any any unnecessary payments. In other words, do you really need all those cable channels you're subscribing to? Do you really need all those magazines you're subscribing to? You know, do you really need do you really need to spend, you know, $300 every other month on on getting your hair done? I had one lady that we were talking about stuff and when we came to retirement planning, her only concern was, I want to make sure I have enough money to be able to get my hair and nails done.

Greg Castle:
I'm not giving that up. I said, okay, well, we're trying to work that out for you. Um, consider delaying Social Security. And again, there's strategies for that where and we can talk about that if you give us a call, the you might want to take a look at, you know, reviewing your investment and withdrawal strategy. There are certain things you should withdraw before others in retirement, and most people don't realize that you can also consider investing in annuities. We've talked about that time and time again to establish an income stream that you can outlive. You know, it's really important to have money coming to you every month that you can never outlive and can never go down. So it's a it's a good thing. So if you're if you're interested in developing a safe money retirement plan, you know, give us a call at (813) 430-7100. Again, that's (813) 430-7100. We can provide you with a detailed retirement roadmap and even help you establish your own personal pension plan that'll help you guarantee an income for the rest of your life. You know, again, you give us a call at (813) 430-7100, or just email me personally at Greg at Safe Money, Masters.com and we'll have a conversation.

Producer:
It's this week in history.

Producer:
Going to get to it. Some celebrity birthdays. That's kind of our our theme for this week in history this time around. Talk to us. First of all, Greg, who was born on June 11th.

Greg Castle:
On June 11th, we got sort of a dual birthday here. You got Joe Montana famous from having four Super Bowl rings with the 49 ers. He turned 67 this past Sunday on the 11th. And also Vince Lombardi, the former coach of the Green Bay Packers, won a number of championships and Super Bowls. He would have been 110 years old on this past Sunday. And as a matter of fact, one of the quotes I've got this quote actually, I had it engraved on a brass insert and I have it inside my notebook. Keep keep it wherever I go. Basically, his quote was, you know, the quality of a man's life is in direct proportion to their commitment to excellence. And so just took commitment and excellence, had to put it on a brass plaque and have it inside insert on my on my notebook. So he had so many different quotes that really resonate even through the ages I'm even today, which are Vince Lombardi quotes all the time. So hopefully, Matt, you and I will be well known when we retire for Oliver Quotes. We come up with this radio show. What do you think?

Producer:
That's right. You know what? I think it is written in the cards already For that to happen. We have we share such witty words of wisdom here on June 12th. Greg, Of course, this would have been the 94th birthday of Anne Frank. And boy, I mean, talk about someone who was a survivor, someone who persevered and really got to share the words of and experiences of such a horrible time with all of us. Through her diary. Yeah.

Greg Castle:
Through the Anne Frank Diary. Yeah. And it's such a tragedy. You know, she died very, very young. She left such a legacy with that diary. And, you know, today she said, remember, she would have been 94 years old yesterday. Yeah. Then today, of all things, you know, not day but correction tomorrow on the 14th, very, very famous individual that we all have heard from. Whether you are in politics or not, we have heard from him sometimes more than we want to. President Donald Trump or former President Donald Trump turned 77 years old tomorrow. He was he was president number 45. And love him or hate him, it seems to be nobody in between. Love him or hate him. You know, if you get a chance, you know, be sure and wish him a happy birthday. And then on June 17th, which would be this coming Friday, is this coming Saturday, we have birthdays of a couple of well known actors and musicians. Dean Martin, Mr. Martini would have been 106 years old this coming this coming Saturday. And then one of the Fab Four, The Beatles, Paul McCartney, is going to be turning 81. And luckily he and his music are still with us.

Producer:
Wow. Yes, definitely. Definitely. So. He obviously legendary and still going. Thankfully these days and just had a hit on the radio actually not long ago with when somebody had taken one of his songs and kind of done a mash up with a Michael Jackson song. Right. And it was that was really that was actually pretty, pretty cool how the two songs fit together there. Well, just right around four minutes left here, Greg. And we're going to do our weekly mailbag, the time in the show where we're going to address some of the questions and the comments sent in by you, our listeners, for Greg to answer. And this question this time around comes from Kathy in Odessa. Kathy says, I'm 65. I'm single, about to retire. I'm going to have a small pension, about 350,000 in my 401. K So good on you, Kathy, for that. Even though my debt is low, I'm still going to have to pay taxes, property insurance, Medicare, basic living expenses to pay as well. So it's going to be tight, but I think I can make it, she says says my my biggest concern is LTC. So long term care there, I guess, she said. I don't have it, you know, considering my age, it really can't afford it, you know, So as I'm concerned about what might happen if something happens to my health and I don't have long term care coverage, so is there anything I can do? So what's your answer there for Kathy?

Greg Castle:
Yeah, first of all, you know, you really need to get with someone, hopefully us, but with someone and let them help to guide you through sort of a plan of what you need to do and make sure you're going to be able to cover all your expenses in in retirement. When it comes to the long term care aspect, you know, you're right. As you get older, long term care is one of those things that most people don't think about whenever they're younger, they think about it. They think they'll wait by the time they get ready to retire. There's just not enough money to pay for the high premiums that long term care would actually charge. You know, again, one of the one of the biggest advantages of the of the of the entity we've talked about so many times on this show, a fixed indexed annuity are some of the living benefits that are there. And there's a thing in there called different different carriers call them different things, basically a wellness withdrawal or a well-being rider or different things. Some companies charge for this, some carriers don't charge for it. They include it with the basic annuity. Basically, it's an element of long term care. It's not really considered to be a long term care policy in the extent that it does not pay you a daily rate. However, whatever your income level would be at that point that you are that you lose to functions of daily living. Those are the simple things eating, bathing, dressing, toileting, transferring or continents.

Greg Castle:
If you lose two functions of those for a period of 90 days, in most cases, and a doctor signs off on it, then basically your income level will double for a period of up to five years in most cases, and that can be pretty substantial. And basically it comes with a fixed indexed annuity. The. It's one of the living benefits that you have, and it's something that most people find very, very attractive to turn a portion of their portfolio. Now, again, I wouldn't advise you to take all your $350,000 out and put it into a fixed, fixed indexed annuity because you want to make sure you have some money that's a little more liquid. Hopefully you've got some savings as well that you can have liquidity in, but at the same time you can turn a portion of that and let the income begin to grow, just like Social Security would. And if you have an interest in that, then by all means give us a call. You can reach me personally at (813) 430-7100. Or if you just want to send me an email and I'll respond back to you, you can see me the email at Greg at SafeMoneyMasters.com. You know, again, if you have any questions at all or you have any questions you'd like to have addressed on air like Cathy just did, by all means, you know, send that to our email at Greg at SafeMoneyMasters.com. And Matt, I think that probably pretty much concludes the show for this week. Do you think?

Producer:
Yeah, that'll just about do it. As we look at the as we look at the clock there. But Greg, great great show, great information to share with our listeners. A lot of helpful stuff. And so I hope that we and I know that we've been able to help out. And by we I mean you because, you know, you're the expert on these things. So I know that you've been able to help out our listeners. So thank you for sharing all that knowledge with us and look forward to doing it again next time.

Greg Castle:
Matt I'll look forward to working with you next week as well. So everyone have a good week. Good weekend and we'll see you next Tuesday. Same bat time.

Producer:
Same bat channel.

Greg Castle:
Bye bye, folks.

Producer:
Thanks for listening to Safe Money Masters with Greg Castle. You deserve to work with a financial expert who has a track record of helping clients exceed their financial goals by implementing safe and proven strategies to schedule your free No obligation consultation with Greg, visit SafeMoneyMasters.com.

Producer:
Not affiliated with the United States government. Greg Castle does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. A merry AmeriLife assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

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